Overall sentiment remains positive and to a similar extent as in the first three months of the year, according to the Royal Institution of Chartered Surveyors (RICS) / Canadian Institute of Quantity Surveyors (CIQS) Construction Monitor Q2 2024.
Construction activity came in at +23 as against +24 in the first quarter of the year, which means that while it barely changed, it is still growing. This figure is similar across construction firms of all sizes, noted the report, which indicates a consistent picture across the sector.
Current workloads continue to grow and within infrastructure projects, the strongest areas of growth appear to be in energy and transportation.
In terms of new housing project starts, prices and sales remained a little more subdued, however, the RICS-CIQS dataset is designed to capture ongoing development work as opposed to “new spades in the ground” or completion transactions. The office and retail construction sectors continue to reveal negative trends.
When looking at credit conditions, the Bank of Canada (BoC) had only made one cut in interest rates. However, since survey field work closed, it allowed a further quarter point move.
The report noted that what appears to be a pivot by the BoC is causing suspicions that further monetary accommodation will come through faster than markets had previously anticipated, which promotes a more hopeful outlook.
The two critical factors identified by respondents as holding back market activity were skills and general labour shortages. Roughly two-thirds of respondents highlighted such scarcities, while the first quarter shares (66 per cent for skilled trades and 61 per cent for general labour) are marginally lower than before.
It is the area of skilled trades where the survey suggests that recruitment challenges are most severe. Roughly one-half of contributors indicated problems in sourcing quantity surveyors while 40 per cent mentioned project managers.
“The Bank of Canada has forecasted an economic growth increase for the remainder of 2024 and into 2025, which should result in us seeing a continued momentum in the infrastructure sector. The interest rate cut in July along with market stipulating that further cuts in 2024 are forthcoming, should lower mortgage rates, making it more financially palatable for builders and owners to take on new mortgage debt loads in both the residential and non-residential sectors to help stimulate an increase in workload in these sectors,” said Sheila Lennon, chief executive officers of CIQS.